Tired of exciting stocks that quickly disappear?These three top-quality companies are poised for long-term growth.
Many growth stocks that skyrocket end up being short-lived shooting stars. But what if I told you that there are stocks that can offer all the thrills of growth investing while limiting investment risk? I’m talking about a stock that offers solid cash returns and a strong balance sheet, with a Innovators targeting large end markets.
On that note, here are three incredible growth stocks that will last a decade or more. These should serve your portfolio for a long time and help you build long-term wealth.
Fiverr’s ambitious mission
Let’s start with Fiverr International (FVRR -1.54%).
Often dismissed as a beneficiary of coronavirus lockdowns due to questionable business prospects in a normal economy, Mr Fiver continues to prove doubters wrong. . The freelance services marketplace operator has seen its revenue more than triple in five years, including a 14% increase in the past two years.
The company’s mission is to “change the way the world works together.” Its ambitious goals include revolutionizing the way people think about work and career concepts. Management believes there is a significant market for creative, professional and technical freelance services worth $247 billion in the United States alone. As companies embrace contractors and freelancers, the overall addressable market is expanding. And it’s a big world beyond America’s borders, giving Fiverr even bigger long-term goals. Most of the freelancing is still managed offline, and Fiverr’s business trajectory continues to grow.
So Fiverr has big dreams, hinting at a growth story over the years. It’s also highly profitable, converting 22% of its revenue into free cash flow in the second quarter.
We’ve talked about Fiverr’s skeptical market makers before. The stock price has fallen 88% in three years, and the stock is trading at a rock-bottom price of 9 times forward earnings. This is one of my favorite stocks to buy today, and I expect it to skyrocket over the next 10 years.
Innovative advertising ideas from The Trade Desk
Next up is The Trade Desk (TTD 1.07%).
This company helps advertisers publish effective digital advertising campaigns. If Fiverr connects the right freelancers with the right jobs, The Trade Desk connects the right ad space with the right marketing messages.
The company is also an innovator in coming up with new technologies to circumvent ad tracking restrictions. Its Unified ID 2.0 platform is a privacy-focused alternative to the tracking cookies that have underpinned the industry for decades. Although other companies are free to use this open standard, it was primarily designed by The Trade Desk.
That’s why The Trade Desk’s stock has soared amid the recent downturn in the online advertising industry. This makes sense, as the company is making its advertising campaigns more cost-effective. At a time when consumers are clutching their wallets during an inflationary crisis, squeezing the most value out of their advertising budgets becomes even more important.
Top-line sales have increased 57% in two years and are expected to continue increasing in the coming years. The company’s balance sheet is also very clean, with $1.5 billion in cash equivalents and no long-term debt. The Trade Desk stock isn’t cheap, but there are good reasons why investors are paying a premium.
Toast’s one-stop shop for restaurant solutions
Finally, say hello to Toast (TOST -1.80%).
This company provides software and hardware for the restaurant industry. Food service managers have many backend options, from specialized payment services and marketing tools to shift tracking spreadsheets and handwritten notes. Toast does it all in a fully integrated system. Each transaction updates ingredient inventory, marketing strategy, menu planning, and more. You also don’t have to figure out how to make a large number of incompatible systems communicate with each other.
Toast’s expansion plan is very methodical, targeting a few cities at a time until a large number of satisfied customers provides effective word-of-mouth marketing. Order-taking tablets and payment processing terminals are sold at cost, giving small businesses another reason to try Toast’s system at minimal cost.
And the system actually works. Toast’s sales have doubled in two years. The company is profitable with $1.2 billion in cash reserves and no long-term debt. If you make a great product, customers will come.
This is another strong growth story with a huge target market. In the wetlands of Florida where I live, toasted services are already ubiquitous, but there’s plenty of room for continued expansion elsewhere. And, as I mentioned in my Fiverr analysis, the world is a big place, so Toast’s strategy should be internationalized at some point. The stock has a premium price at the moment, but I don’t care because Toast’s business prospects are clear and huge.
Anders Bylund has held positions at Fiverr International, The Trade Desk, and Toast. The Motley Fool has positions in and recommends Fiverr International, The Trade Desk, and Toast. The Motley Fool has a disclosure policy.
